Sunday, March 1, 2009

Reading through the Berkshire Hathaway annual report (something that is highly recommended - it's not nearly as dry as it sounds) you quickly run in to the operating goals. Honestly, thinking about them out of context, there's not much else you need to do either on a small scale (a 4 person project, a small business, a career, your family, etc) or on the scale they operate in order to be successful:

(1) maintaining Berkshire's Gibraltar-like financial position, which features huge amounts of excess liquidity, near-term obligations that are modest, and dozens of sources of earnings and cash; (2) widening the "moats" around our operating businesses that give them durable competitive advantages; (3) acquiring and developing new and varied streams of earnings; (4) expanding and nurturing the cadre of outstanding operating managers who, over the years, have delivered Berkshire exceptional results.

Substitute credibility or trust for finances for some scenarios, other valuable qualities for others, or obviously keep it finance-related for economic things, but I don't think there's a lot more to it from what I've seen so far.

The devil's in the details implementing this game plan, surely, but I think it's important to realize/remember that the game plan itself is not complicated.

As I read through more of it, some other gems:

- Beware the investment activity that produces applause; the great moves are usually greeted by yawns.- Beware geeks bearing formulas (as a geek, I agree)- Regarding municipal finance: "The gap between assets and a realistic actuarial valuation of present liabilities is simply staggering."

Thursday, January 22, 2009

Along the same lines as credit card finance charges, I simply refuse to banking fees.

It isn't that I don't think they are justified, it's that I think they are a tax on ignorance and it's less costly to avoid fee-inducing banking situations.

To that end, I just got a "collected funds fee" at the bank, and investigated it. Here's the skinny from my banker:

"Yes, there's a difference between collected and available balance and your analysis is correct. Depending on where the funds are drawn from and if they've been collected is the determining factor. Funds might be available but not collected from the maker bank which means a portion of what is available is technically a loan to the customer and the reason for the fee (I was able to reverse it). Some customers find a balance between savings and checking or attach a line of credit to the operating account as an option to avoid the repeated fee."

So if you deposit checks regularly, you're going to see three balances. "Balance", "Available Balance", and "Collected Balance".

If you want to make sure you get no fees, find the lessor of those three numbers, and treat that as your "fee-free balance".